Three Categories In The Health And Wellness Industry That Venture Capitalists Are Betting Big On
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There has been an explosion in the health and wellness space over the last few years as more consumers demonstrate a willingness to invest in sophisticated wearable devices and technology-enabled fitness equipment.
People are increasingly trying to understand how to optimize their nutrition, exercise habits, recovery, sleep, mental health, and stress management.
Based on a detailed look across industry resources, recent data suggests that new products in the wellness market are being met with large amounts of capital from public and private investors.
Crunchbase, a company that lists business information for private and public companies, estimates that at least a billion dollars in venture funding were raised in the last year by early-stage technology companies in the health and wellness space. Among the tech companies focused on fitness, hundreds of millions of dollars were raised just over the last couple of quarters.
Across all stages and regions, some estimates show that global investment in digital health companies could be more than $10 billion in 2020.
These figures give us a glimpse into where we can expect to see substantial growth in the near future.
Companies focused on personalized food and nutrition, diagnostic trackers, and stress management are among those likely to see more growth from consumers and investors alike in the future.
Fitt Insider, a media company that studies trends in the health industry, recently outlined anecdotes from investors that reinforce these segments, among others, as recipient categories for more venture capital funding in the coming months and years.
Let’s dive deeper into each of these areas where innovations and investments are flourishing.
Personalized Nutrition & Medicine
The idea of personalized nutrition isn’t new, it just hasn’t reached the scale and widespread adoption yet that many have predicted. It’s been clear for a long time that every human being digests macronutrients and micronutrients differently.
Companies like Persona and Viome use online assessments or samples to provide a comprehensive overview of your body’s nutritional or gut health. Then, you are given the option of ordering personalized vitamins, supplements, and probiotics that are tailored to your goals or deficiencies and delivered to your doorstep.
Everlywell, another company in this space, just raised $175 million in venture funding to offer in-home testing for things like food sensitivity, allergies, and more recently, COVID-19.
The holy grail of this personalized medicine market opportunity exists not just in how customized nutrition can drive better dietary outcomes, but also with how the foods we consume can promote more optimal physical activity or rest and recovery. Ultimately, creating a closed-loop of data can empower consumers to make smarter choices, faster.
The traction and growth of venture-backed companies like Hims and Ro, the company behind the direct-to-consumer treatment pill company Roman, are early indicators of how people are turning to more digital experiences to receive personalized treatment options.
The hundreds of millions of dollars that have been invested in healthcare companies like these are pushing some to consider moving from the private markets into the public markets, where more capital is available to expand their reach.
Metabolic Health Trackers & Diagnostic Wearables
Along the same lines of understanding how inputs like food impact each of us differently, investors have zoomed in on the area of metabolic health as a key area of growth in the wellness market.
The recent investment of $12 million into Levels by venture capitalists is one example that demonstrates an anticipated tailwind of consumer interest in this area. Levels is a company that makes a ‘bio-wearable metabolic sensor’ that enables people to receive actionable data from how foods impact blood sugar levels.
Continuous glucose monitors have long been a staple of metabolic measurement but access to the devices is met with regulatory restrictions. Still, data shows that this level of information is needed. Research suggests that fewer than two in ten Americans are considered metabolically healthy and more than 80% of people who currently have prediabetes, don’t even know it.
Whoop, an activity, sleep, and wellness tracker, is another company in the wellness space that made headlines with its recent $100 million investment round. Multiple high-profile athletes joined that investment after perceiving the technology and business model to be compelling.
Unsurprisingly, larger technology companies have also demonstrated an interest in this space. The continued development of the Apple Watch and recent announcements by Amazon represent just a portion of what we should expect from bigger names in the space.
Sleep Management & Optimization
Even with the innovations in wearable tech and the growth of personalized medicine, venture capitalists aren’t sleeping on the market opportunity in the recovery space, pun intended.
The last couple of years have brought with it massive amounts of capital into the sleep and recovery space. Companies like Eight Sleep, Purple, Leesa, Casper, and others are seeing big capital infusions to help people solve many of the common sleep problems, resulting in billion-dollar valuations.
What used to be an industry that focused on mattress height or positioning has evolved into one where biometrics and data measurement dictate changes in mattress temperature and comfort. While it would be easy to assume there is little room for improvement in the estimated $27.5 billion mattress market, many investors see much more opportunity for expanded offerings and complementary products.
What’s On The Horizon: Psychedelics, Massage Devices, and More
Beyond the traditional health and wellness categories mentioned above, it also looks like a few more segments are bubbling with investor interest.
Psychedelics, for example, is one uncommon market related to mental health that is gaining appeal among mainstream firms. The famed Shark Tank investor Kevin O’Leary is one of the more vocal people who is betting on this space. This comes as Peter Thiel reportedly invested in a company’s $125 million funding round. As big names like these jump in, many of their colleagues will undoubtedly follow.
Physical recovery hardware is also seeing more notoriety. Products like Hyperice or Theragun, described as deep muscle massage treatments, are growing in popularity among athletes and active people who are trying to recover more quickly from soreness.
While the cost to consumers varies wildly for each of the products across these verticals, the common thread is that the current revenue derived from them all reinforce people’s commitment to a better, healthier lifestyle.
As a result, investors will continue to invest in new areas that speak to our individual wellness goals.